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Phoenix Group, a UK life assurer, announced a £250m rights issue this morning with an unusual underwriting structure that will mean shareholders are "effectively underwriting the deal" rather than the underwriting banks.

Phoenix Group has arranged the deal in order to pay off some of its group debt and give it the "flexibility" to increase dividends in future, it said in a stock exchange statement this morning. A total of £250m worth of new shares will be issued at a price of 500p, a significant discount to their current market price of 643p, up 8.8% this morning.

In recognition of that, only 75 basis points of the underwriting fee that Phoenix is paying will go to brokers JP Morgan and Deutsche. The rest of the 1.75% fee will go to Phoenix's shareholders and Och-Ziff specifically will also pick up £8m in additional structuring fees and expenses.

JP Morgan and Deutsche have structured a series of total-return swaps between themselves, Och-Ziff and Phoenix's other shareholders – which include entrepreneur Hugh Osmond's Sun Capital and private-equity firm TDR Capital – in order to pass along the economic risk of the rights issue failing.

New York-based Och-Ziff Capital Management, known as a manager of alternatives funds, is stumping up £80m towards Phoenix's rights issue. This will mean it will become a 9.2% shareholder of the group. McConville said: "They recognise we have a core competence in managing closed life funds."

Other shareholders will be able to participate in the deal in a pro-rata fashion, according to their existing holdings. Phoenix said it already had agreement from 43% of its shareholders, including Sun Capital and TDR.

McConville said the deal's purpose was to repay some of Phoenix's debt, much of which relates to its acquisition of Resolution Life in 2008. Phoenix's bank debt will reduce to £1.9bn, from £2.4bn as at June 30, 2012, and the group has also restructured its remaining debt profile.

McConville explained: "It was not a credit issue but a maturity issue – we had a number of significant redemptions due in 2014, 2015 and 2016 that did not match our expected cashflows over those years. So we have restructured the debt with the same lenders – a consortium of 12 British and international banks."

Phoenix also said this morning it had agreed a new funding deal with the trustees of its £1.7bn staff pension scheme, which is known as the Pearl Group Staff Pension Scheme, in reference to Phoenix's former name.

The trustees have agreed to reduce market risk in the scheme's investments, taking further steps to reduce equity holdings and increase its interest-rate and inflation hedging – services performed by Phoenix's asset-management subsidiary Ignis Asset Management.

The measures will increase Phoenix's capital level by £300m, according to the regulator's metric, increasing its group surplus from £600m to £900m. McConville said that there was no significant change to the pension scheme's lineup of fund managers, who comprise Ignis, Legal & General Investment Management, and property manager DTZ.

The unusual underwriting-fees structure resembles another deal struck in 2010 when rival life insurer Resolution Limited raised $3.4bn to acquire certain businesses from Axa. As Resolution had secured pre-agreement from its shareholders, the underwriting banks Barclays Capital and RBC Capital Markets agreed to share the fee pot with them.